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Real Estate Center

Mar 17, 2009 11:10 AMPublication: The East Hampton Press & The Southampton Press

East End real estate industry accused of monopoly practices

Mar 17, 2009 11:10 AM

The owners of Hampton Bays-based Suffolk Research Service, George and Jean Simpson, have struck another blow in a David-and-Goliath battle against 26 heavyweights of Hamptons real estate.

Representing themselves as litigants, earlier this month Mr. and Ms. Simpson each filed a $9 million minimum complaint against several local real estate heavy-hitters and officers, including the big five firms—The Corcoran Group, Prudential Douglas Elliman, Sotheby’s, Brown Harris Stevens, and Town and Country Real Estate—as well as the company that owns and operates RealNet Solutions and Hamptons Real Estate Online (HREO). The lawsuit alleges anti-competitive practices, collusion, price-fixing, and breaking real estate law via restraint of trade by operating and participating in the Open RealNet Exchange (OREX) system, which the Simpsons describe as an illegal and cost-prohibitive multiple listing service, or MLS.

In the complaint, the Simpsons allege that of the approximate 1,500 to 2,000 agents on the South Fork, between 1,000 and 1,200 of them work for the defendants. By virtue of the use of OREX, which the Simpsons allege costs $40,000 a year, the defendants are using unfair practices to control the East End real estate market, the lawsuit charges.

The remaining defendants listed in the suit are a who’s who of the East End real estate industry. They include the firms Agawam Realty, Coldwell Banker, Devlin McNiff Real Estate, Mrs. Condie Lamb Agency, Engel & Volker Real Estate, Hampton Homes, Keeshan Inc., Saunders & Associates, Norma Reynolds Sotheby’s Real Estate, The Marketplace Realty, Atlantic Beach Realty, 91 Jobs Lane Realty, The Morley Agency, First Hampton Realty, Strough Real Estate, and Simon Harrison Real Estate. Individually cited are Gary DePersia, Tim Davis, and Susan Breitenbach of The Corcoran Group, and Paul Brennan of Prudential Douglas Elliman.

When called in search of a response to the complaint on Friday afternoon, a “no comment” response was given by a Corcoran Group representative as well as by Mr. Brennan, Mr. DePersia and Agawam Albertson Principal Broker Jack Hangen. Calls to several other defendants on Friday afternoon were not returned.

According to information gathered by the Simpsons—their business, Suffolk Research Service is a supplier of real estate deed transfer data, and Ms. Simpson is a licensed real estate agent—the cost to join OREX is 40 to 80 times more expensive than the state-approved multiple listing services operated by the Long Island Board of Realtors and the Hamptons and North Fork Realtors Association.

A longtime opponent of OREX, Mr. Simpson said that the “illegal MLS” is a tool that is used to price the smaller real estate agencies out of business.

“They are basically putting me and everybody else out of business by not playing fair,” he said during a telephone interview on Friday. “The purpose of joining [OREX] is to exclude ... They want to keep the business all to themselves.”

In response to the lawsuit, which was filed on Friday, March 6, in United States Eastern District Court of New York, OREX Managing Partner Nick Khuri defended the service that his business provides, while also shooting down the Simpsons’ claims as “false” and “exaggerated.”

“We have no pretense to be MLS or anything—we just supply the technology,” he said on Friday. “Our product is a database system ... We took real estate out of the Stone Age and into the e-Age, and no one is excluded.”

Though Mr. Khuri was reluctant to quote concrete prices for the use of his company’s technology, he did say that OREX is free for companies that use both RealNet and HREO. He added that there is an annual fee for RealNet and HREO that is based on the package, users, officers, and whether or not the company is a charter member. “The costs vary and are complex and detailed. There are many factors to take into account,” he said.

Mr. Khuri said that he and Mr. Simpson have a history of legal battles, and that Mr. Simpson has brought lawsuits against his company in the past but has so far never gained any legal traction.

“George has brought lawsuits against us and others in the past, but the judge threw it out ... He has a rep for trying to compete and go into the market using lawsuits, character assassination and going to the press,” Mr. Khuri said, dismissing the lawsuit as frivolous.

Mr. Simpson maintained that he has a responsibility to enforce the principle of the law and the integrity of the real estate industry on the East End. He says the use of OREX—which he estimated lists between 80 to 90 percent of the “exclusive” listings being sold on the South Fork, and which he alleges are not listed on other multiple listing services—goes against what is right and fair to excluded agents and their clients.

“They know they’re breaking the law—they just don’t give a damn because they’re making money and taking a bigger piece of the pie for themselves,” he said. “This is one of the reasons the real estate industry has the reputation it has, and it’s very well deserved. The most important thing here is that people are being damaged. This is the biggest industry in the Hamptons, and if you collude, you are hurting the buyers and sellers here ... You are hurting the consumer by playing these silly little protectionist games.”

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YOU WANT TO TALK ABOUT CRAZY??? GO TO HIS SITE ETCORNGODS. COM
Here you will see how he denegrates women, people of varios races and religion. and so on... He also talks about how aliens caused 911. why don't the editors add that to their so called news?
By Anonymous Hamptonite (2), Southampton on Mar 17, 09 12:23 PM
Hello??? What does a secondary site, dedicated to personal beliefs, have to do with REAL ESTATE issues? Stay on the topic- "wagging the dog" is obvious behavior, likely perpetrated by someone in the mix of the lawsuit.
It's not incumbent upon a new reported to seek out methods of disparagement- better left to people that seek to divert attention from the issue at hand, like yourself. Nice try.
By LM (35), riverhead on Mar 17, 09 12:43 PM
sorry- news reporter.
By LM (35), riverhead on Mar 17, 09 12:44 PM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By Anonymous Hamptonite (2), Southampton on Mar 17, 09 1:54 PM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By LM (35), riverhead on Mar 17, 09 2:03 PM
ET CORN GODS rules!
By RealLocal (76), Bridgehampton on Mar 17, 09 2:16 PM
The man may be froot loops with the ETCORNGODS stuff, but he seems to be onto something with the restraint of trade complaint -- except that they are representing themselves probably because no law firm would accept their case.

Still, I remember 30 years ago when "RealtorĀ®" actually meant something.
By Frank Wheeler (1826), Northampton on Mar 18, 09 10:36 AM
Realtors: Necessary?

The Billy Joel / Jerry Seinfeld transaction years back seemed to go OK without realtors involved (and boy were THEY annoyed), so it stands to reason that most transactions of a lesser complexity could be completed the same way.
By Undertow (64), Southampton on Mar 18, 09 5:11 PM
Mr. Simpson, Be thankful that you are not part of their elite group. They are a disgrace to the people in the Hamptons. Not one agent working for any of the named companies is out for anything but themselves in the rat race they call real estate. The fall of Wall Street banks is a slap in the face to each and every Real Estate company out there. May they be the next ones to fall.
By outoftown (2), southampton on Mar 18, 09 8:00 PM
That real estate in the Hamptons (with peculiar similarities to NYC) is compared to a "rat race" should make Hamptons brokers cringe (or, race to their publicist, announcing that "they" opened up real estate by using the MLS before anyone else in the Hamptons"- how else to extricate from the embarrassment)?
Provided the anti trust fines are paid in advance, of course.
If "you are the company you keep" holds merit, I agree with outoftown 100%, George.
By LM (35), riverhead on Mar 18, 09 8:36 PM
I suspect that all of this is going to be for naught. The major brokerages are going to get creamed by this downturn in the market and the business model for real estate brokerages will eventually go the way of stock brokers, travel agents, etc. Once people have the online tools they need to buy and sell real estate, e.g., Zillow, only real estate attorneys will be needed. The barrier to entry for real estate agents is pathetically low and, accordingly, they add absolutely zero value to a transaction. ...more
By HEJIRANYC (32), Sag Harbor on Mar 23, 09 12:34 PM
From what we hear this George guy is just an angry dude who's been run out of every respectable real estate office on the east end after they found his listing system to be inferior. This sounds like sour grapes to us. He DOES look kind of angry in that picture.
By we could run this town! (129), wonderful Wainscott on Apr 3, 09 3:47 PM